Morales says tobacco lawyers want him mum

By Ken Herman

AMERICAN-STATESMAN STAFF

Wednesday, April 16, 2003

Indicted former Texas Attorney General Dan Morales said Tuesday that lawyers he hired to represent the state in the landmark tobacco litigation want to bar him from discussing the case, a move he said could hamper his defense on charges that he tried to steer money from the case to a friend.

Morales said his lawyers were notified last week that the five private lawyers would seek "a protective order which would restrict my ability to disclose information relevant to the tobacco case to parties outside of the litigation."

"The effect of that is I could not talk to other lawyers about this in the process of putting together a team for representation," Morales said.

Michael Tigar, a lawyer representing the lawyers in the tobacco case, did not return a telephone call to his Washington office Tuesday. Austin consultant George Shipley, representing the tobacco case lawyers, said they would have no comment.

The tobacco industry, settling a case initiated by Morales and handled by the outside lawyers he hired, agreed in January 1998 to pay $17.3 billion to the state to cover any damages caused by its products.

Morales was named last month in a 12-count federal indictment charging him with mail fraud, conspiracy, filing a false tax return and lying on a mortgage loan application.

Prosecutors claim that Morales, before his unsuccessful bid for the 2002 Democratic gubernatorial nomination, illegally shifted hundreds of thousands of dollars from his campaign account to his personal use.

The conspiracy charge alleges that Morales and Marc Murr, a Houston lawyer also under indictment, schemed to improperly cut Murr in on the tobacco case fees.

Morales and Murr have denied all charges.

A status conference in the Morales criminal case is scheduled for today.

Morales has been talking for months about the possibility of a state lawsuit to seek recovery of the fees paid to the outside lawyers hired to handle the tobacco case.

Jane Sheppard, a spokeswoman for Attorney General Greg Abbott, said no decision has been made on whether such a suit will be filed. "Our investigation continues," she said.

The potential courthouse effort to force the tobacco case lawyers to forfeit their $3.3 billion in fees would be filed under a 1999 Texas Supreme Court ruling that said a lawyer who breaches fiduciary duty to a client can be required to forfeit all or part of the fee even if the breach did not cause actual damage to the client.

Coincidentally, that case involved some of the tobacco case lawyers and stemmed from their representation of plaintiffs in a case regarding a 1989 chemical plant explosion that killed 23 workers and injured many others.

One of the resulting lawsuits produced a $190 million settlement, including a $60 million fee for the lawyers.

Some of the plaintiffs subsequently sued their lawyers on several grounds, including an allegation that they failed to communicate settlement offers and agreed to a settlement without the clients' approval.

kherman@statesman.com; 445-1718